Park City Real Estate Blog

Two days ago we learned that PCMR would be safe to operate for the next two seasons. Today we learned to be true that which we had been hoping for: that the operation of PCMR would no longer be a question. See more here.

With that out of the way, let's all concentrate on getting One Wasatch accomplished.

PCMR will pay the $17.5m bond to stay open this season and would pay $19m for 2015-16. Let's hope that Vail buys the base area before too long and puts a final, great end to all of this. See more here in the Park Record.

Over my 28 years living in Utah I have often wondered why the nation-state mentality of the ski areas in the central Wasatch Mountains has been so pervasive. Now it looks like we have the beginnings of the owners of Deer Valley, Park City Mountain Resort, Canyons, Alta, Snowbird, Solitude and Brighton getting on the same page and making a ski/ride experience exponentially better than anywhere else. See the recent article in the SL Tribune here. I look forward to skiing with you from Deer Valley to lunch at Snowbird someday!

It doesn't matter which business(es) you are in, knowing who is buying your goods/services is critical to success. Below is a fascinating animated graph from my friends at Calculated Risk showing 160 years of age distribution in this country. Prior to seeing this data I did have some concerns about how a decreasing younger generation takes care of an increasing older one. It helps to get the full effect of the graph if you place a pen at the age group you are tracking, then, in particular, watch the baby-boomer bubble pass through it.

On Sunday I posted the following animation of the U.S population distribution, by age, from 1900 through 2060. The population data and estimates are from the Census Bureau (actual through 2010 and projections through 2060).

There are many interesting points - the Depression baby bust, the baby boom and more. What jumps out at me are the improvements in health care. And also that the largest cohorts will all soon be under 40 (I suspect more and more emphasis will shift away from the Boomers to younger generations). Heck, in the last frame (2060), any remaining Boomers will be in those small (but growing) 95 to 99, and 100+ cohorts.

Some people are concerned about supporting those older Americans. But the ratio of total Americans in the prime working age (20 to 55) will be about the same in 2060 as in 1900. The mix of dependents will change (fewer young, more old), but having fewer infant and child deaths, and a longer healthier life, seem like huge positives to me! Also I expect the definition of the prime working age will expand to include more older workers - so the ratio of dependents to workers might actually decline.

The local news outlets have cautiously put a couple updates out there regarding what is happening with Talisker and the Canyons. Give me a call if you want my thoughts on the matter. Otherwise, enjoy these twolinks for the latest "updates". Also interesting for those with a passion for Park City Mountain Resort/Talisker lease issues is this.

I attended a fascinating lecture a couple of weeks ago about the travel and leisure habits of America's affluent ($150k+ annual income households). This demographic has certainly had, and will continue to have, a profound impact on Park City real estate. Drop me a line or give me a call if you want my thoughts on how the Resonance Report could affect your buying or selling behavior. It is well worth the read.

Keller Williams Park City Real Estate is pleased to present to you the 2012 -2013 Perspective on the Utah and Park City real estate. Making educated real estate decisions requires reliable and accurate information as well as the perspective of industry professionals with deep experience and expertise. It has been said that The map is not the territory and this idea certainly applies to real estate. While influenced by a vast number of factors, both fixed and variable, real estate remains local in nature and care must be taken when interpreting data. One-size-fits-all market reports cannot replace the trained eye of a professional Realtor and the perspective afforded a national realty company like KellerWilliams. This years Perspective is greatly expanded to assist all property owners and prospective purchasers in their decision making process. In addition to our traditional in-depth look at Park City area real estate, we have added segments on:
The Utah economy and relative position nationally
Data on employment and education
Commercial and Investment real estate, both locally and nationally
Home building and new construction, including construction commodities
Farm, ranch, and agricultural property
Demographic and consumer trend analysis
Home seller and buyer trends Our wish is to provide you with the most comprehensive tool in the market for understanding the current market, where it is likely headed, and how to make the best decisions. It is our goal, at a minimum, to stimulate quality thought and exploration of the options in Utah real estate and to be a steady guide in a constantly shifting real estate landscape. We invite you to explore this annual Perspective and to contact one of our 100+ real estate experts with your questions and comments. At Keller Williams Park City Real Estate, we greatly appreciate our clients and the relationships we have built and look forward to creating new opportunities together. Our success comes from you; we value your business and friendship and look forward to working together in contribution to our great community. Please consider us your personal resource for all things real estate. With this spirit in mind, we are pleased to present the KW Park City 2012-2013 Perspective.

It is interesting that the October 2012 to November 2012 price increase was 0.3%. Compounding that percentage monthly for a year yields 3.66%. The difference between 3.66% and 7.4% obviously has causes. As the article indicates demand goes down during the winter months. But I bet there is at least another factor at play: new construction is filling some of the inventory void, helping to slow the increase of prices.

What I am seeing in the better (e.g.: little if any room to build new) locations of the Park City market is once a couple good sales happen, other listed properties come off the market. Their sellers feel that there isn't a better place right now to keep their equity and, two or three years hence, they are betting their property will be worth considerably more. Right or wrong, that further reduces supply and puts more upward pressure on prices.

Prices are increasing nationally and in the Park City/Deer Valley area. Interest rates are very attractive and, if current rumblings at the Fed are any indication, low interest rates won't be around through 2015, as previously thought. If you are a buyer on the fence, take advantage of: the seasonally lower prices of winter; the larger inventory than we will likely soon have; and the cheap money.

Ski conditions are good up high thanks to mother nature and good down low thanks to state of the art snow-making. On my way to work this morning I began to wonder how many people might not be coming this weekend for Deer Valley's opening due to low snow totals and then I decided to send you the phone-photo, below (not my best work, admittedly). If you only relate to snow totals, think again. Living at 8700', on the south side of Empire Pass, I see and feel everyday what the snow conditions are like. The inches of water in the snowpack are astounding. From a ground (rocks, fallen trees, etc.) coverage standpoint, that's a very good thing. We have had three "good base snow" storms. The last one, two nights ago, was the densest snowfall I have ever seen. Had it been ten degrees colder that night we would have had two feet of snow. Instead, we got an excellent base. See my Empire Pass weather link(mouse over Empire Pass Weather Forecast) to see the predictions for fluffier snow on top of all this, now through the weekend.

The greatest snow on earth and the greatest pro-business environment exist right here in the state with the perennial #1 ski resort in the nation, Deer Valley. For the winners and losers of the Pollina 2012 pro-business rankings, see http://www.pollina.com/top10probusiness.html

This link is invaluable to anyone involved with Park City area real estate. Every quarter we crunch the numbers of the entire Park City Multiple Listing Service to show you the trends. In summary: sales have increased considerably; distressed inventory has decreased considerably; and the hyper-buyer market is changing to a stable market. The best slides are pages 4, 10, 13 and 14. For a detailed analysis of any of our numerous micromarkets, call me at 435 640 7111.

1) Goldman Sachs put out a research note today: House Prices Finding a Bottom. This isn't a strong call, and is only a slight upward revision to their previous forecast. As they note, there are many factors adding to the "noise" in the house price indexes (distressed sales, foreclosure moratorium, recent warm weather), and a 0.2% increase in prices over the next year isn't much.

A few brief excerpts:

[O]ur model projects a nominal house price gain of 0.2% from 2012Q1 to 2013Q1 and another 1.4% from 2012Q1 to 2013Q1. Taken literally, this would imply that the bottom in nominal house prices is now behind us.

While the recent house price news is encouraging, we would not yet sound the "all clear" for the housing market or the broader economy. First, the instability in the seasonal factors over the past few years is a potential source of noise in the recent house price indicators, and also in our model. ... In addition, the seasonal factors can be also distorted by one-off items ... All of these complications ... adds to the uncertainty as to whether the better recent numbers indicate a true turnaround in the US housing market.

Second, even if the market is gradually turning, as our model implies, the difference between a slightly declining and a slightly increasing national average for home prices is minor, especially given the wide variation between stronger and weaker markets. Our broad view remains that national home prices will remain close to flat over the next 1-2 years, or at a minimum that the recovery will remain very "U-shaped."

If someone looked at just manufacturing, they might think the US is near a recession. And if they just looked at housing, they'd think the economy is recovering. Which is it?

First, the decline in the ISM index was partially driven by exports (no surprise given the problems in Europe and slowdown in China). The ISM export index declined to 47.5 in June from 53.5 in May, the lowest level since early 2009. However some of this export weakness will probably be offset by lower oil and gasoline prices.

Second, the current ISM reading of 49.7 isn't all that weak. Goldman Sachs analysts noted yesterday: "A reading such as this has historically been associated with just under 2% real GDP growth--very near our current second-quarter tracking estimate of 1.6%."

Third, housing is usually a better leading indicator for the US economy than manufacturing. Historically housing leads the economy both into and out of recessions (not out of the recession this time because of the excess supply in 2009). Manufacturing is more coincident. So the ISM index suggests some weakness now - mostly abroad - whereas housing suggests an ongoing sluggish recovery.

Note: there are different measures of "shadow" inventory. CoreLogic tries to add up the number of properties that are seriously delinquent, in the foreclosure process, and already REO (lender Real Estate Owned) that are NOT currently listed for sale. Obviously if a house is listed for sale, it is already included in the "visible supply" and cannot be counted as shadow inventory.

From CoreLogic: CoreLogic® Reports Shadow Inventory Fell in April 2012 to October 2008 Levels

CoreLogic ... reported today that the current residential shadow inventory as of April 2012 fell to 1.5 million units, representing a supply of four months. This was a 14.8 percent drop from April 2011, when shadow inventory stood at 1.8 million units, or a six-months supply, which is approximately the same level as the country was experiencing in October 2008.
...
Since peaking at 2.1 million units in January 2010, the shadow inventory has fallen by 28 percent. The decline in the shadow inventory is a positive development because it removes some of the downward pressure on house prices, said Mark Fleming, chief economist for CoreLogic. This is one of the reasons why some markets that were formerly identified as deeply distressed, like Arizona, California and Nevada, are now experiencing price increases.
...
CoreLogic estimates the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of distressed properties that are seriously delinquent, in foreclosure and held as real estate owned (REO) by mortgage servicers but not currently listed on multiple listing services (MLSs).
...
Of the 1.5 million properties currently in the shadow inventory, 720,000 units are seriously delinquent, 410,000 are in some stage of foreclosure, and 390,000 are already in REO.

Click on graph for larger image.

This graph from CoreLogic shows the breakdown of "shadow inventory" by category.

Note: The "shadow inventory" could be higher or lower using other numbers and methods; the key is that CoreLogic uses a consistent method (and removes properties currently listed) - and that their estimate of the shadow inventory is declining.